No substance to reverse mortgage myths
The member organisation governing the reverse mortgage sector feels retirees are sacrificing their standard of living because they are ruling out the use of reverse mortgage products for fear of being swindled.
In response to this negative sentiment, the Senior Australian Equity Release Association of Lenders (SEQUAL) has tried to dispel some of the common myths surrounding these products.
One of the common misconceptions held by consumers is retirees will lose ownership of their homes. SEQUAL has refuted this, stating the retiree maintains ownership of the property and the property is used only as an asset to secure the loan.
A second myth about reverse mortgages is that families must sell the property once the retiree has passed away.
According to SEQUAL, families need not worry about this outcome, as most products of this kind usually give people the option of simply paying back the loan without selling the property.
A further fear held by consumers is that by taking out a reverse mortgage, retirees will lose their equity and any subsequent capital growth in their homes.
However, SEQUAL says that while this scenario is a possibility, if the loan is drawn down in a prudent manner, people can actually increase the equity in their home when prices rise.
SEQUAL executive director Kieren Dell said: “There are many myths surrounding reverse mortgages ... but provided you deal with a reputable lender who is a member of SEQUAL, fear of these myths should not stop retirees from using these products in the right circumstances.”
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